The Contract of Sale in Conveyancing Explained in Simple English
The Contract of Sale is the legally binding document that ties the buyer and seller into completing the transfer of land/property in England and Wales. The drafting of the contract happens right at the outset of the conveyancing process; however, it only ever becomes legally binding once your solicitor exchanges contracts.
The terms of the contract are standard; however, the errors and mistakes that appear in the contract can delay the finalisation of the process. In this article, we explain how the contract is drafted, common mistakes, how to negotiate the terms, and the process for making the contract binding.
What is the Contract of Sale in Conveyancing?
The contract of sale is the central legal document that outlines the terms and conditions of a property transaction in England and Wales. Until the contract is exchanged, the property is noted as Sold Subject to Contract by the estate agent. This means that the seller and the buyer have agreed in principle to sell at a price, but neither is legally or financially bound to the transaction until the contract is exchanged; hence, subject to contract.
With no commitment to buy after an offer, and your only financial implication being your own legal and survey costs, both the buyer and seller are acutely focused on getting the transaction exchanged as quickly as possible to make each other legally bound.
The Standard Conditions of Sale (SCS) Explained
To ensure consistency and fairness across the residential market in England and Wales, the vast majority of contracts incorporate the Standard Conditions of Sale. Currently, the Fifth Edition – 2018 Revision is the industry standard. These conditions are a set of "ready-made" Terms & Conditions maintained by the Law Society that govern common issues such as:
- The payment and holding of the deposit.
- The seller's duty to provide "vacant possession" upon completion.
- The risk/implications and remedies for breaching the contract between the exchange and completion.
By using the SCS, solicitors can focus on "Special Conditions" unique to the specific property rather than renegotiating basic legal principles for every transaction.
What are the key clauses in the Contract?
The following are the key parts of the standard contract, but shouldn't be read in isolation. You should read the complete contract before signing it.
Element | Detail |
Particulars | Names of the Seller and Buyer, the property address, and the Title Number from HM Land Registry. If selling more than one title, all titles should be included. |
Purchase Price | The agreed price to buy the Title Numbers that includes all the property within the demise and marked as included in the TA10 Fittings and Contents Form. |
Special Conditions | Bespoke clauses, such as requiring the seller to fix a specific defect, or clarifying the inclusion of certain Chattels not included within the TA10 Form. |
Exchange Deposit | Contractually, this is 10% of the purchase price. |
Completion Date | This is left blank until it is agreed by the chain on the exchange of contracts. |
Do CQS firms always use the standard contract?
The Conveyancing Quality Scheme (CQS) is designed to ensure that all member firms follow the Law Society Conveyancing Protocol. This protocol explicitly directs solicitors to use the Law Society’s own standard forms and conditions to ensure transparency and efficiency.
For residential sales, CQS firms are expected to use the SCS (5th Edition – 2018 Revision). Deviating from these without a specific legal reason can be seen as a breach of the protocol’s goal to "reduce the time taken" and "minimise the potential for disputes. The primary benefit for a CQS solicitor is that they know exactly what is in the small print of another CQS solicitor’s contract, allowing them to focus only on the special conditions and enquiries.
Exclusions to the use
Even for a CQS-accredited firm, there are specific circumstances where the SCS may not be used, or may be heavily modified:
- New Build Properties: Developers often have their own bespoke contracts. While these may incorporate some elements of the SCS, they often include extensive "developer-friendly" clauses regarding construction timelines and snagging that override standard conditions.
- Auctions: Property auctions often use the Common Auction Conditions (CAC). While similar in spirit to the SCS, they are tailored for the immediate "hammer-fall" exchange process.
- Commercial Property: If a CQS firm is handling a mixed-use or commercial unit, they will switch to the Standard Commercial Property Conditions (SCPC).
When is the contract legally binding?
Exchange is the physical or telephonic process where the two solicitors, or conveyancing firms, confirm they hold identical signed contracts and have confirmation from their client to exchange. At this precise moment:
- The completion date is finalised and written into the contract.
- The buyer pays a deposit (usually 10% of the purchase price) to the seller’s solicitor.
What Happens if a Breach of Contract Occurs?
If either party fails to complete on the agreed date, they are in breach of contract. The non-defaulting party’s solicitor will typically serve a "Notice to Complete," which usually gives the defaulting party ten working days to finalise the transaction. If they still fail to complete:
- If the Buyer defaults: The seller can rescind the contract, keep the 10% deposit, and resell the property.
- If the Seller defaults: The buyer is entitled to the return of their deposit with interest and may claim for losses incurred due to the delay.
What happens after you sign your contract of sale?
Once your solicitor has finalised the legal enquiries, they will start preparations for exchanging contracts. This includes preparing the Report on Title, the signing documents, securing the completion date, and more.
Your Next Step in the Conveyancing Process:
Preparing for Exchange of Contracts
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
